By Conveyancer & Solicitor, Victoria Leech
The simple answer to the question is that you can withdraw or reject an OFFER on a property at any time up to the exchange of contracts. After exchange of contracts you will have entered into a legally binding contract and you will be subject to the terms of that contract.
Withdrawing Before Exchange of Contracts
If you decide to withdraw or reject the offer before exchange of contracts, you may be subject to certain charges.
For instance, if you’re the seller you need to check the terms of your contract with the estate agent. If they have found a buyer who is willing and able to complete but you withdraw the property from sale, you may still have to pay the estate agent’s a fee.
Both sellers and buyers must check the terms of the retainer with their Conveyancers. If the Conveyancers have begun work and the sale/purchase does not complete, you may be charged by the hour for the work done. Any disbursements incurred by your Conveyancers will still be payable. So for example, if your Solicitor has submitted a request for searches from the Local Authority, the cost of those searches are still payable by you.
For people selling Leasehold properties, any payments to landlords or managing agents for information will not be recoverable either.
If you are a buyer, you will also be unable to recover mortgage adviser fees or lender valuation fees.
Withdrawing After Exchange of Contracts
If you change your mind after the exchange of contracts and do not wish to proceed with the sale or purchase, you will be breaching the terms of the contract.
Usually in this instance the party which is not at fault will issue a Notice to Complete. The notice provides the other party 10 days’ grace period to complete. They must also pay interest at a daily rate to the party not at fault.
Regardless of which side issues the notice, both sides need to be willing and able to complete. Otherwise you can still be in default, even though the original reason for non-completion was not your doing.
The consequences of not completing are usually as follows:
- If the buyer fails to complete the seller is entitled to end the contract and keep the deposit –which is usually 10% of the agreed sale price
- The seller can re-sell the property and any contents included in the contract
- The seller can claim damages
- If the seller fails to complete, the buyer can end the contract and the seller is liable to pay the buyer the daily rate of interest during the Notice to Complete period, along with the original deposit
- The buyer has to return any documents received to the seller at the seller’s expense
- The buyer’s and seller’s remedies are not restricted to losses determined in the contract. There is nothing to stop non-defaulting party suing the other for breach of contract in Court for additional losses or for specific performance of the contract (in other words, applying to the Court to make the defaulting party complete the original sale/purchase)
- If the buyer fails to complete the seller could claim losses incurred due to market depreciation – so if the value of the property has decreased from the date the contract was breached the buyer has to pay the difference